Buying w/partner & BTL'ing our flats

[Mark83]

I thought I'd ask on here for some impartial (and hopefully educated) advice.

My partner and I want to buy a house together. Simple enough if we both sell our flats but wondered if we could keep one/both.

We both have mortgages on our flats and wondering if we could; convert to BTL, take some equity out for a deposit and get a mortgage on a 'family' home.

My flat is worth c.£170k and I have £70k remaining on my mortgage. 1-bed in Ware, Herts. £750pcm rental return.

Ms Mark83's flat is worth £325k and she has about £270k remaining on hers. 1-bed in Kilburn, London. £1300pcm rental return.

Household income c.£100k

Over to PH...

[Ozzie Osmond]

You pay your mortgages out of taxed income. Any income from a BTL is taxed. Any capital growth on a BTL is taxed.

If you pay down your current mortgages you reduce your outgoings and avoid paying tax on BTL income (you are presumably both 40% taxpayers but can only get 20% relief on a BTL loan). You also avoid the hassle of dealing with tenants.

Why not buy a decent house and live in it with tax-free capital gains?

[trowelhead]

Ozzie Osmond said:

Any capital growth on a BTL is taxed.

You do get some relief if you lived in it in past x years?
http://www.thisismoney.co.uk/money/mortgageshome/a...

Another option is to sell both flats and take the equity, buy your own home and then invest in some higher yielding property. The current gross yield on both is about 5%. Are you are anticipating higher than average capital gains in the future?

Have you worked out if the new (lack of) BTL interest rate relief will effect you? (it will)

I don't see any reason why not if you are happy to tie up the capital for that yield, and are happy to take on a bit more risk than just using as equity on your primary residence. But be sure to work out taking into account the new tax rules on btl.

Remember to get consent to let from your lender / building insurance etc.

Will you be close enough to self manage?

[Sarnie]

Mark83 said:

I thought I'd ask on here for some impartial (and hopefully educated) advice.

My partner and I want to buy a house together. Simple enough if we both sell our flats but wondered if we could keep one/both.

We both have mortgages on our flats and wondering if we could; convert to BTL, take some equity out for a deposit and get a mortgage on a 'family' home.

My flat is worth c.£170k and I have £70k remaining on my mortgage. 1-bed in Ware, Herts. £750pcm rental return.

Ms Mark83's flat is worth £325k and she has about £270k remaining on hers. 1-bed in Kilburn, London. £1300pcm rental return.

Household income c.£100k

Over to PH...

It's Let-To-Buy mortgages you need, not BTL.

Max LTV will be 75% on a LTB basis meaning a max lend of £127,500 on your property and £243,750 on your partners flat.

So you could 'release' £57,500 from yours but nothing from your partners flat if her balance is already £270,000.......